GBP/USD Fundamental Analysis Feb 2 , 2012, Forecast

The Chartered Institute of Purchasing and Supply (CIPS) Construction Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the construction industry. A reading above 50 indicates expansion in the construction industry; a reading below indicates contraction. It gives an indication about the health of the construction section in the UK. Traders watch these surveys closely as purchasing managers usually have early access to data about their company's performance, which can be a leading indicator of overall economic performance.

A higher than expected reading should be taken as positive/bullish for the GBP, while a lower than expected reading should be taken as negative/bearish for the GBP

10:00 EUR PPI (MoM) -0.1% 0.2%

The Producer Price Index (PPI) measures the change in the price of goods sold by manufacturers. It is a leading indicator of consumer price inflation, which accounts for the majority of overall inflation.

A higher than expected reading should be taken as positive/bullish for the EUR, while a lower than expected reading should be taken as negative/bearish for the EUR.

13:30 USD Nonfarm Productivity (QoQ) 1.0% 2.3%

Nonfarm Productivity measures the annualized change in labor efficiency when producing goods and services, excluding the farming industry. Productivity and labor-related inflation are directly linked-a drop in a worker's productivity is equivalent to a rise in their wage.

A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.

13:30 USD Initial Jobless Claims 373K 377K

13:30 USD Unit Labor Costs (QoQ) 0.9% -2.5%

13:30 USD Continuing Jobless Claims 3565K 3554K

Initial Jobless Claims measures the number of individuals who filed for unemployment insurance for the first time during the past week. This is the earliest U.S. economic data, but the market impact varies from week to week. Continuing Jobless Claims measures the number of unemployed individuals who qualify for benefits under unemployment insurance.

GBP/USD Fundamental Analysis Feb 2 , 2012, Forecast

GBP/USD Fundamental Analysis Feb 2 , 2012, Forecast

Analysis and Recommendations:

The GBP/USD is currently trading at 1.5861 continuing to move up strong on positive UK data. Opening today at 1.5759

The ADP jobs reports came in below forecast but still showed the addition of jobs in both the public and private sector. Employment in the U.S. nonfarm private business sector increased by 170,000 from December to January on a seasonally adjusted basis. The estimated advance in employment from November to December was revised down to 292,000 from the initially reported 325,000. Employment in the private, service-providing sector rose 152,000 in January.

In the UK, the Sterling strengthened after data showed that the manufacturing sector in the U.K. expanded at the fastest pace in eight months in January, as output grew at the fastest rate in 10 months and new orders rose.

Housing prices and sales continued to drop. Which is not unexpected but still below forecast, which was still pretty negative.

Analysts from Oxford Economics, at the Institute for Fiscal Studies (IFS) briefing, have predicted that the UK economy will shrink in the current quarter. That would put Britain back into recession. Oxford Economics also warned that that eurozone crisis is casting a dark shadow over the global economy

The IFS is arguing that George Osborne should consider some form of fiscal stimulus in next month's budget. The IFS said there was a strong case for Mr Osborne to forego medium-term tax or spending giveaways in his March Budget - though it said there might be scope for tax cuts equivalent to 2p off the main rate of income tax in future years if the economy develops favourably.